Charlie O'Connor (Dublin South West, Fianna Fail)
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Question 129: To ask the Minister for Finance the cost to the Exchequer of the annual travel pass scheme, whereby employees can receive tax relief on travel expenses, being extended to all commuters; and if he will make a statement on the matter. [21447/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The position in relation to travel tickets is that where an employer provides an employee with an annual or monthly bus or train pass, the cost of such a pass is not taxable. In addition, where an employee foregoes salary, and such salary foregone is used by the employee to purchase an annual or monthly bus or train pass, then the salary foregone is not taxable. Both of these instances are subject to certain conditions.

I am advised by the Revenue Commissioners that employees are not required to include in their tax returns income arising from the provision of travel passes by their employers. In the case of employers the expense of travel passes to employees is allowable as a deduction in arriving at profits for tax purposes. However, the employer's tax return of income does not contain an entry in respect of this item and the employer's profit and loss account does not normally distinguish between this particular expense and other employment-related expenses.

Data available to my Department from Dublin Bus suggests that in 2005 approximately 40,000 travel tickets were issued by them covering not only their own services but also the Irish Rail and Luas services. On the basis of ticket sale receipt figures supplied by Dublin Bus and assuming an average tax rate of 30% plus the value of PRSI//Health levies forgone the cost in revenue forgone in respect of those service is estimated at approximately €7million. These, however, are not comprehensive figures and, in these circumstances it is not possible to provide a totally reliable estimate of numbers or costs involved at present. As a result existing data does not provide a sound basis on which to estimate the cost of extending the scheme to all commuters.

The extension of the scheme to all commuters i.e. to almost the entire working population, would be likely to have serious cost implications for the Exchequer. In addition, it would place a significant administrative burden on the local offices of the Revenue Commissioners who would have to process the reliefs/credits for each employee. One of the advantages of the scheme as it currently stands is that it is well controlled, easily administered and reasonably well targeted. The widening of the exemption in the manner suggested would significantly dilute these advantages.